GBP/USD 5-Minute Analysis

On Tuesday, the GBP/USD currency pair also showed a downward movement, although the decline and the day's volatility were relatively weak. Once again, the market effectively ignored the macroeconomic background. The minimal reaction from traders was prompted by the JOLTs report in the U.S., which showed job openings exceeding forecasts, leading to a slight strengthening of the dollar.

Overall, everything remains the same. If the British pound falls, it does so very weakly and for a short time. Whenever there's too much "chaos," and the dollar grows longer than expected, Trump steps in and puts everything back in its place. Thus, expecting a sustained rise in the dollar remains extremely difficult. Technically, the pair remains above the Ichimoku indicator lines, so the uptrend is intact despite the price breaking out of the ascending channel.

As the global trade war situation continues to worsen, the dollar lacks medium-term growth prospects. For the market, the trade war factor is currently the only thing that matters; practically all other factors are being ignored.

In the 5-minute timeframe on Tuesday, two excellent trading signals were formed. First, the pair bounced precisely from the 1.3537 level and successfully reached the nearest target—the Kijun-sen line. Then, it bounced precisely from the Kijun-sen line and nearly returned to the 1.3537 level by the end of the day. Thus, traders could have opened a short position first and then a long one. In both cases, profits of about 25 pips were achievable.

COT Report

COT reports for the British pound show that commercial traders' sentiment has constantly changed over the past few years. The red and blue lines, representing the net positions of commercial and non-commercial traders, cross frequently and generally hover near the zero mark. They are again close to each other, indicating an approximately equal number of long and short positions. However, the net position has been growing over the past year and a half.

The dollar continues to decline due to Trump's policies, so market makers' demand for the pound is currently not of major importance. If the de-escalation of the global trade war resumes, the dollar may have a slight chance to strengthen. According to the latest COT report for the British pound, the "Non-commercial" group opened 14,200 BUY contracts and 2,800 SELL contracts. Thus, the net position of non-commercial traders grew by 11,400 contracts.

The pound has grown significantly lately, but it's important to understand that the main reason is Trump's policies. Once this reason is neutralized, the dollar could recover — but no one knows when that will happen. The pound itself has no fundamental reasons for growth. Nevertheless, traders currently have more than enough "Trump factor" to make trading decisions.

GBP/USD 1-Hour Analysis

In the hourly timeframe, the GBP/USD pair maintains an uptrend despite breaking out of the trend channel. The pair's further movement fully depends on Donald Trump and developments in the global trade war rather than technical analysis. The general market sentiment and attitude toward America and its president remain sharply negative, making it difficult for the dollar to count on strong growth. Moreover, the U.S. president regularly disappoints the market with new measures and tariffs, while macroeconomic data from overseas is increasingly weak.

For June 4, we highlight the following important levels: 1.2863, 1.2981-1.2987, 1.3050, 1.3125, 1.3212, 1.3288, 1.3358, 1.3439, 1.3489, 1.3537, 1.3637-1.3667, 1.3741. The Senkou Span B (1.3420) and Kijun-sen (1.3489) lines may also serve as signal sources. Setting a Stop Loss at breakeven is recommended if the price moves 20 pips in the correct direction. The Ichimoku indicator lines may shift during the day, so this should be considered when determining trading signals.

Service sector PMI reports are scheduled for release in the UK and the U.S. on Wednesday. However, they are unlikely to generate serious interest under current circumstances. Thus, volatility may remain low today, and the pair is unlikely to consolidate below the critical line.

Illustration Explanations:

• Support and resistance price levels – thick red lines where movement may end. They are not trading signal sources.
• Kijun-sen and Senkou Span B lines—These are strong Ichimoku indicator lines transferred to the hourly timeframe from the 4-hour one.
• Extremum levels – thin red lines where the price has previously rebounded. These act as trading signal sources.
• Yellow lines – trend lines, trend channels, and other technical patterns.
• COT Indicator 1 on the charts – the size of the net position for each category of traders.